MANAGING YOUR PERSONAL FINANCES

UNIT 2: CALCULATING GROSS PAY, DEDUCTIONS

AND NET PAY

DO NOW:Round the following number to tenths, hundredths, and thousands:

6.5518 tenths hundredths thousands

DAILY GOALS I will be able to correctly round

numbers to the tenths, hundredths and thousands.

I will be able to calculate net pay.

Rounding Practice

See Rounding Practice Handout

Salaried Employees are not on a Time Clock …

These employees get an annual salary that is paid: * Monthly (12 times per year)

* Twice a Month (24 times per year)

* BiWeekly (26 times per year)

Calculating DeductionsPractice calculating deductions on a gross salary of $100.00. Use the following payroll tax deductions:FICA – 6.2% 6.2 % x $100 = _______Medicare – 1.45% 1.45% x $100 = _______FIT – 10% 10% x $100 = _______SIT – 1.5% 1.5% x $100 =_______

What is your total deductions? _______

Calculating DeductionsPractice calculating deductions on a gross salary of $100.00. Use the following payroll tax deductions:FICA – 6.2% 6.2 % x $100 = _______Medicare – 1.45% 1.45% x $100 = _______FIT – 10% 10% x $100 = _______SIT – 1.5% 1.5% x $100 =_______

What is your total deductions? _______

Important Note: All

deductions should add up to about

20% of your gross salary.

Calculation check: Is your

answer for total deductions about 20%

of your gross salary?

Calculating DeductionsPractice calculating deductions on a gross salary of $500.00. Use the following payroll tax deductions:FICA – 6.2% 6.2 % x $500 = _______Medicare – 1.45% 1.45% x $500 = _______FIT – 10% 10% x $500 = _______SIT – 1.5% 1.5% x $500 =_______

What is your total deductions? _______

Calculating DeductionsPractice calculating deductions on a gross salary of $500.00. Use the following payroll tax deductions:FICA – 6.2% 6.2 % x $500 = _______Medicare – 1.45% 1.45% x $500 = _______FIT – 10% 10% x $500 = _______SIT – 1.5% 1.5% x $500 =_______

What is your total deductions? _______

Calculation check:

Is your answer for total deduction

20% of your gross salary?

Basic Net Pay Formula:(for hourly employees)

Net Pay = Gross Pay – Deductions

N = G - D

Basic Net Pay Formula:(for hourly employees)

Practice: Calculate Neve’s Net Pay. Neve’s Gross is $200 and Deductions are $40?

Net Pay = Gross Pay - Deductions

Basic Net Pay Formula:(for hourly employees)

Practice: Calculate Eric’s Net Pay. Neve’s Gross is $300 and Deductions are $60?

Net Pay = Gross Pay - Deductions

Basic Net Pay Formula (N=G-D):

Practice: Calculate Justin’s Net Pay. Justin’s Gross is $250 with the following Deductions:

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Basic Net Pay Formula (N=G-D):

Practice: Calculate Justin’s Net Pay. Justin’s Gross is $250 with the following Deductions:

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Calculation check:

Is your answer for total deduction 20% of your gross

salary?

Deductions+ Gross Pay x 20%

Basic Net Pay Formula (N=G-D):

Practice: Calculate Ryan’s Net Pay. Ryan’s Gross salary is $550 with the following Deductions:

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Basic Net Pay Formula (N=G-D):

Practice: Calculate Ryan’s Net Pay. Ryan’s Gross salary is $550 with the following Deductions:

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Calculation check:

Is your answer for total deduction 20% of your gross

salary?

Deductions+ Gross Pay x 20%

Putting it all together-1Practice: Calculate George’s Gross Pay (he worked 18 hours and his hourly pay is $10 per hour ).Then, calculate Deductions (with the percentages provided);Then, calculate Net Pay.

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Gross Pay = # Work Hours Wage ($) Pay ($)

(Regular Hours)

Putting it all together-1Practice: Calculate George’s Gross Pay (his hourly pay is $10 per hour and he worked 18 hours).Then, calculate Deductions (with the percentages provided);Then, calculate Net Pay.

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Gross Pay = # Work Hours Wage ($) Pay ($)

(Regular Hours)

Calculation check:

Is your answer for total deduction 20% of your gross

salary?

Deductions+ Gross Pay x 20%

Putting it all together-2Practice: Calculate Ron’s Gross Pay (he worked 20 hours at an hourly wage of $10 per hour and worked 5 hours of overtime (at 1.5 hourly rate).Then, calculate Deductions (with the percentages provided);Then, calculate Net Pay.

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Gross Pay = # Work Hours Wage ($) Pay ($)

Regular Hours

Overtime Hours

Total Gross Pay

Putting it all together-2Practice: Calculate Ron’s Gross Pay (he worked 20 hours at an hourly wage of $10 per hour and worked 5 hours of overtime (at 1.5 hourly rate).Then, calculate Deductions (with the percentages provided);Then, calculate Net Pay.

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Gross Pay = # Work Hours Wage ($) Pay ($)

Regular Hours

Overtime Hours

Total Gross Pay

Calculation check:

Is your answer for total deduction 20% of your gross

salary?

Deductions+ Gross Pay x 20%

Putting it all together-3Practice: Calculate Larry’s Gross Pay (he worked 20 hours at an hourly wage of $10 per hour and worked 5 hours of holiday time (at 2x hourly rate).Then, calculate Deductions (with the percentages provided);Then, calculate Net Pay.

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Gross Pay = # Work Hours Wage ($) Pay ($)

Regular Hours

Overtime Hours

Total Gross Pay

Putting it all together-3Practice: Calculate Larry’s Gross Pay (he worked 20 hours at an hourly wage of $10 per hour and worked 5 hours of holiday time (at 2x hourly rate).Then, calculate Deductions (with the percentages provided);Then, calculate Net Pay.

Gross Pay

FICA 6.20%

Medicare 1.45%

FIT 10.00%

SIT 1.50%

Total Deductions

Net Pay

Gross Pay = # Work Hours Wage ($) Pay ($)

Regular Hours

Overtime Hours

Total Gross Pay

Calculation check:

Is your answer for total deduction 20% of your gross

salary?

Deductions+ Gross Pay x 20%

Calculating Net Pay Practice

See Payroll Practice #2

EXIT TICKET:

Explain why it is important to recognize that deductions between 20-30% may be taken out of your pay.